Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/174444 
Year of Publication: 
2016
Series/Report no.: 
Working Papers No. 2016-14
Publisher: 
Banco de México, Ciudad de México
Abstract: 
This paper empirically compares the implications of two distinct models of FX intervention, within the context of Inflation Targeting Regimes. For this purpose, it applies the VAR methodology developed by Kim (2003) to the cases of Mexico and Brazil. Our results can be summarized in three points. First, FX interventions have had a short-lived effect on the exchange rate in both economies. Second, the Brazilian model of FX intervention entails higher inflationary costs and this result cannot be entirely explained by differences in the level of pass-through. Third, each model is associated with a different interaction between exchange rate and interest rate setting (conventional monetary policies).
Subjects: 
Foreign exchange intervention
Exchange rate pass-through
Exchange rate regime
Monetary policy coordination
JEL: 
F31
E31
E52
Document Type: 
Working Paper
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